Sir George speaks out on homelessness and housing
11 Feb 2009
Below is the speech Sir George made in the House of Commons in a debate on Housing

Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow my successor but one, the hon. Member for Ealing, Acton and Shepherd’s Bush (Mr. Slaughter). I was not surprised to hear that housing remains the most challenging problem for his constituents—it certainly was for the 23 years that I represented Ealing Acton—but I must say to him that he overstated his case. Accusing my hon. and right hon. Friends of having a housing policy of “studied cruelty” is absurd, and saying that it is our intention to punish poor people is a parody of my party’s housing policy. I honestly do not think that that sort of language advances very far what should be a serious debate about housing.
I wish to pick up a point made by the hon. Member for Sheffield, Attercliffe (Mr. Betts). I am sure that some communities are resistant to more social housing being built, but other communities do not have the rather narrow vision to which he referred. There is a village in my constituency in Hampshire that is accommodating all the extra houses required by the local plan and still has taken the view that there is not adequate social housing in the village. There is a move to sell off the allotments owned by the village and relocate them at the edge in order to provide more social housing in the middle of the village, over and above that which it has to provide. The reason for that movement is that the village is in control—this is not additional housing being foisted on it by a remote authority; it is local people seeing a local need for houses for the teachers, the postmen and the nurses, and wanting to make that provision. So, there is another side to that coin of resistance to new housing.
I do not want to fight old battles, although there is a real temptation to do so, given that some of the speeches we have heard have gone back to the 1970s, the 1980s and the 1990s. However, I will say that the introduction of the right to buy was a progressive and enlightened social reform that was bitterly resisted by Opposition parties at the time. It enfranchised millions of people and made a reality of home ownership for people for whom it had previously been a dream. It transformed monolithic local authority estates and generated large sums of money that either reduced public debt or were recycled back into new housing. I make no apology for being a keen supporter of the right to buy when it was introduced.
Other policies were bitterly opposed at the time—housing action trusts and large-scale voluntary transfer—but are now an accepted part of housing policy. They are the foundations on which housing policy is now built.
Bob Russell: Will the right hon. Gentleman give way?
Sir George Young: I hope that the hon. Gentleman will not invite me to fight old battles.
Bob Russell: I just wanted to ask the right hon. Gentleman whether he agrees that if the proceeds from the right-to-buy policy had been invested in new housing stock, we would not be in our present situation. Will he acknowledge that connection?
Sir George Young: I was a housing Minister in the 1980s, and the receipts from right to buy tended to clock up in Tory-controlled boroughs outside the cities. We prevented them from spending those receipts and we recycled the spending power into the inner cities, which were not generating right-to-buy receipts to the same extent. That was not a popular policy with my colleagues, but it was the right thing to do. So it was certainly the case that we stopped some local authorities spending their capital receipts, in favour of areas of greater need.
With the benefit of hindsight, the Government must be wishing that the £12 billion spent in December on the VAT reduction had been spent, at least in part, on helping those in housing need. Instead of an imperceptible reduction in retail prices, the money could have been used to buy up land at low prices; build out sites with planning consent; buy properties overhanging the market; increase grant for section 106 schemes frozen in the pipeline; and put more resources into the mortgage rescue scheme, helping those in housing need and threatened with being homeless. We would then have had something tangible to show for the huge debt that the Government have clocked up in our name. We would have had some assets on the other side of the balance sheet.
If people are in housing need, what matters to them is not the number of new homes being built, but the number that are re-let. That is the currency that really matters. I was disappointed to read—I think that it was in The Times last Saturday—a badly informed piece attacking the tenants incentive scheme. If one wants to provide a new home to rent to someone on the housing list, it is much cheaper and quicker to encourage someone to move out of an existing local authority or housing association home and re-let it. It is perfectly acceptable to say to people whose circumstances have improved since they became the tenant of a registered social landlord, “Can we help you achieve what may be your ambition of becoming a homeowner?” In that way, public money can be used to generate a re-let and increase turnover. I hope that the tenants incentive scheme and related schemes will remain part of the portfolio, and that the Government do not fall for the criticism that I read last Saturday.
A constituent who came to see me at my advice bureau a few days ago said, “Why are the Government putting so much money and energy into rescuing the motor industry and not doing nearly so much for housing?” He had a good point. I note in passing that both the motor industry and the construction industry have as their sponsors experienced Ministers who left the Government when Tony Blair was Prime Minister, but who came back last year at the invitation of the Prime Minister—Lord Mandelson and the Minister for Housing.
We all have sympathy with those who work in motor manufacturing, but I start from the premise that people need homes more than they need cars. In the motor industry, there is excess supply and inadequate demand, as pictures of cars stacked at docks constantly remind us, but when it comes to affordable housing, there is excess demand and inadequate supply. So, to the neutral observer, the case for additional Government support is far greater for housing than for motor manufacturing, especially as houses, by definition, are manufactured locally, whereas a good percentage of the cars we buy are imported.
My constituent had a good question. Why, since the beginning of the year, have we had statements, initiatives and publicity on the one, but not on the other? It may be because the motor industry is better organised and located in politically sensitive areas. Whatever the reason, we need to redress the balance, and I hope that in the next few weeks we will have an announcement of support for the housing and construction industries. The £12 billion spent on VAT reduction was a wasted opportunity, and I wonder what housing Ministers were doing during the debates before that decision. Did they make their case forcefully?
I wish to be brief, as many hon. Members wish to speak, but I want to touch on two options, one a dead end and the other a possibly useful way forward. The dead end is a return to council house building. I have nothing against local authorities building houses, but it is not a sensible use of public money. As Bob Kerslake said in Inside Housing last week:
“The problem is that the HCA has been forced to treat money councils borrowed to build homes, on top of grant, as public subsidy. If a housing association bids, only the grant is counted as public subsidy, making council schemes more expensive to the public purse.”
So anyone who wants to get more homes for a given amount of public money will route the money through housing associations, not through local authorities.
The pressure to build council houses is not coming from those on the waiting list. All they want is a good quality home, at an affordable rent, with a responsible landlord—they do not mind whether it is a local authority or a registered social landlord. The pressure to build council houses comes from councils that do not realise that the world has moved on and that they now have a strategic and enabling role, rather than one as a direct provider.
The Prime Minister has raised false hopes on this front. Speaking at the New Local Government Network, he said:
“If local authorities can build social housing in sustainable communities that meets the aspirations of the British people then we will give them our full backing and put aside anything that stands in their way.”
Elsewhere he inserted the key phrase “cost-effectively”. When he was Chancellor, he was pressed on several occasions to change the rules to allow local authorities to borrow without that scoring against public expenditure, and he refused. It would be an astonishing U-turn if he now agreed to that, especially as we now have an independent body in charge of the definition of public borrowing. Those who believe that the resumption of council house building will solve our problems are
crying for the moon. A much more promising option is not mentioned in any of the motions, but it would help those on waiting lists and in housing need. It is to revive the debate about getting private institutional funds into renting, through housing investment trusts or real estate investment trusts. For 15 years, there has been an all-party consensus on the need for a new investment vehicle to promote investment in residential property that would attract long-term institutional funds, broaden the market, give a wider choice to those who want to rent, help those on the waiting list and enable private and institutional investors to get exposure to the residential property market that they cannot get at the moment.
Such trusts were envisaged as the last stage of a series of reforms to promote the increased supply of good quality rented housing. We introduced assured shorthold tenancies to put tenancies on a viable basis. Once we had that underpinning the private rented sector, there was going to be a new fiscal framework to get serious, respectable, long-term institutional funds into property for rent. At present, such institutions can get exposure to equities and to commercial property, but not to residential property. Such trusts would allow that exposure. No one knows whether we are at the bottom of the property market, but we are a lot closer to it than a year ago. There is therefore a real appetite to invest now, with billions of pounds available, as long as we have the right investment vehicle. Unfortunately, the Government have been very dilatory.
In March 2004, the Treasury consultation paper said that a real estate investment trust
“structure in the UK would therefore set a challenge for the industry to encourage development of new housing, which managed within”
that structure. It continued:
“The Government is keen to encourage greater renewal in the property sector, and the development of new...residential buildings”.
In 2006, the then Chancellor said in his Budget speech:
“To attract more capital into house building, we are now legislating to introduce for Britain the real estate investment trusts that are so successful in the USA.”—[ Official Report, 22 March 2006; Vol. 444, c. 293.]
However, nothing has happened since. The only investment trusts have been in commercial property and pubs.
At a meeting with Bob Kerslake a few days ago, I was interested to hear that that dialogue is being revived, at long last. With public expenditure now stretched to its limit, we need a fresh look at how institutional funds can be harnessed to tackle the needs that my hon. Friend the Member for Welwyn Hatfield (Grant Shapps) mentioned so eloquently in his opening speech. It is going to need some flexibility and lateral thinking, but the time is right for a fresh initiative. I hope that the Minister, when he winds up, will tell us that that option is being actively explored, as I believe that it would offer very real benefit to those in housing need.

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Copyright Sir George Young Bt. 2015